Local Non-Profits Attract Greater Financial Scrutiny
Council is requesting that all local non-profits provide financial statements as a prerequisite of consideration for borough funding.
Non-profits that receive borough funding will be subject to greater financial scrutiny next year.
At the request of Deputy Mayor Ed Trawinski, council has agreed that beginning next year the disbursement of borough money to non-profits should be contingent on the submission of an IRS 990 and a basic financial statement.
“Do we get a justification for what these funds are used for?” Trawinski asked at the March budget meeting while going over the approximately $63,000 allotted for local non-profits. “Do we get financial statements, or if these are non-profits, their 990s?"
The simple answer is no. Although the borough does see their purchase orders, borough-supported non-profits need not provide IRS 990s or financial statements -- although the borough has asked for them in the past.
Borough clerk Joanne Kwasniewski said when she was acting borough manager she wrote all of the non-profits requesting they return IRS 990s, but didn’t receive a single response.
“I don’t think we even tried last year, to be honest,” she said. “We’ve never gotten them.”
Trawinski said he believed providing an IRS 990 and a financial statement should be a condition of their funding approval.
“You would be amazed what you find out at some of these entities,” he said, citing his experience dealing with non-profits at the county level. “I have six mental health agencies right now that are yelling and screaming about $300,000 in cuts. Two of the mental health agencies have surpluses that exceed their operational budgets.”
Mayor Jeanne Baratta seconded Trawinski’s appeal for more fiscal transparency.
“We know a lot these organizations have other ways of bringing money in,” she said. “We don’t want to be giving somebody a large sum of money to find out that they’ve got interest-bearing accounts that have hundreds of thousands of dollars in it.”
Trawinski said his intention was not to insinuate that local non-profits were hoarding large sums of money and reiterated his support of organizations like the Fair Lawn All-Sports Association and Fair Lawn Football Association, which receive borough funding and work under the auspices of the Recreation Department.
All he wanted to know, he said, was what taxpayers were getting for their money. Trawinski also suggested the borough move to an open and competitive process for determining which non-profit organizations it decides to fund.
“How do we collectively make the judgment that these six [non-profits] are worthy of consideration with the taxpayers dollars as opposed to any other number of groups in town that could very well want to apply?” he said.
Borough manager Tom Metzler said he never considered cutting funding for any of the non-profits that appear in this year's budget because of the value each provides to the community.
“I think the bargain falls to Fair Lawn in that those programs cost considerably more money than what we’re giving them,” he said. “If they were to turn around and say ‘We don’t want to run this anymore,’ and Fair Lawn wanted to offer those types of programs, it certainly is going to cost us a heck of a lot more money than what we’re paying.”
The budget Metzler provided council allocated funding to the following non-profits for the corresponding amounts:
- Senior Center Club - $12,000
- Fair Lawn Football Association - $5,100
- Fair Lawn All Sports Association - $15,700
- Federated Arts Council - $8,000
- Fair Lawn Hockey Association - $14,000
According to the latest data available from GuideStar USA, an information service that tracks public financial information for non-profits, the Fair Lawn All Sports Association brought in $10,000 more than it expensed in 2009.